Smartphone retailers await clarity on GST, keep stocks at minimum

Smaller retailers too are wary of issuing bills as many are yet to update systems, though larger ones say the transition has been seamlessGulveen Aulakh | ET Bureau | July 03, 2017, 08:38 IST

Mobile phone retail stores have kept their stock at a minimum as they await clarity on pricing of new stock that is expected in the coming week in the wake of new goods and services tax (GST) tax regime, which could affect sales for a week or so.

Smaller retailers too are wary of issuing bills as many are yet to update systems, though larger ones such as Croma, Reliance Digital and The Mobile Store say the transition has been seamless.

End consumer sales have been tepid over this weekend, according to most retailers. Consumers seem to be in wait and watch mode, more so after Apple lowered prices across all its models by up to 7.5% on July 1. Brands such as Samsung, Xiaomi, Oppo,Gionee, Intex and Lava had previously said they won’t be changing prices even after GST sets in.

“We usually don’t keep all models but over the last few days, we have lower than what we typically keep,” said a standalone retailer in south Delhi, while another in east said all models were not available but would be in a few days.

A large distributor catering to the north India market, who did not want to be named, said the slow pace of sales at smaller shops will continue for a week or 10 days, as most have yet to do their GST registrations and align their invoicing with it. Since all processes now have to be done online, smaller stores would see an impact on their inventories and supply chain, he explained.

Retail chains such as Croma, Reliance Digital, The Mobile Store, however, reported normal sales for this time of year or compared to a regular Saturday, with at most a 5-6% drop in footfalls – mostly attributable to rains. “We had stocked up, so we did not face any issues, sales were also normal,” said Krishna Kumar, CEO at India’s largest mobile handset retail chain The Mobile Store.

Handset companies such as Karbonn, Intex, Panasonic, HMD, Micromax and others, though, say they experienced fewer problems than expected as most worked to ensure all internal processes and systems were updated to handle change seamlessly.

Rajesh Agarwal, co-founder of Micromax, said internal trainings have ensured its teams are well equipped to handle change and even advice business partners.

“Micromax is also helping by organising partner training at state levels to ensure free education for switching the partner businesses to GST from July 1.”

Samsung has set up a crack team including executives from finance, business innovation, production and consultants to help internally and external supply chain, said industry sources. It has trained all distributors and channel partners for transitioning into GST, inventory management, putting technology in for billing and other processes. Samsung did not officially comment.

Karbonn Mobiles’ MD Pardeep Jain, though, said the entire trade channel would take time to acquaint with changes. “…as of now, we don’t see any specific challenge.” Intex Technologies chief financial officer Rajeev Jain said its accounts, SAP and EY team were working for the last few months to make the transition without hiccups. HMD Global, which sells the Nokia brand of phones, said it had trained its sales team to communicate with its 400 exclusive distributors.